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National Treasury said the collusion by 28 local and foreign banks to manipulate the rand/dollar exchange rate had no impact on the rand depreciation since 2013. It said rand depreciation was driven by broader changes in the global and domestic economies.
In a statement on Friday, National Treasury said the impact of this collusion was limited to individual clients.
The statement read:
This comes after a UK-based multinational, Standard Chartered Bank, admitted guilt in the manipulation of the rand/dollar currency pair and agreed to pay an administrative penalty of R42 715 880 last week.
The bank was one of 28 local and international banks accused of taking part in the complex collusion of the manipulation of the rand/dollar exchange rate between 2007 and 2013, which was suspected of negatively affecting the value of the South African rand.
Some of the 28 banks include HSBC Bank USA, National Association, Merrill Lynch, Peirce Fenner and Smith, Bank of America, Citibank, Credit Suisse Securities LLC, Nedbank Group, FirstRand, FirstRand Bank, Standard Americas, Barclays Bank, Standard Bank of SA, JP Morgan Chase Bank, Nomura International, BNP Paribas, Barclays Capital, Investec, Absa Bank, Standard New York Securities and Standard Chartered Bank.
READ: Standard Chartered agrees to pay R43m after admitting to currency manipulation
The Competition Commission accused these banks of using trading platforms, such as the Reuters currency trading platform and Bloomberg's terminal instant messaging system (chatroom), telephone conversations and meetings to coordinate their bilateral and multilateral collusive trading activities.
The admission of guilt by Standard Chartered follows other banks, including Citibank, which settled in 2017.
In response to a City Press question, the commission said it had not done an analysis on the cost of these acts to the rand or the economy but added that "the industry generates approximately R1 trillion a day".
READ: Unilever reaches R16m settlement with Competition Commission over collusion practices
The banks' lawyers argued at a hearing chaired by Judge Dennis Davis at the Competition Appeal Court that the Competition Commission had no jurisdiction to prosecute them because a large part of forex trade happened virtually and not necessarily on South African soil.
National Treasury said if the allegations were proven to be true, they would indicate the prevalence of poor market conduct practices at that time.
It said regulations had been submitted to ensure that banks did not engage in unfair practices or misconduct when setting reference rates, which were used in the pricing of derivatives and other financial contracts.
"The spot over-the-counter [OTC] market reforms will be considered as part of the review of the Financial Market Act Bill [FMAB]. The OTC market participants will also be subject to core COFI conduct requirements as part of the FMAB review."
National Treasury said:
On Thursday, during the briefing after the monetary policy committee meeting, Reserve Bank governor Lesetja Kganyago said a report conducted following the bank's investigation into claims of rand manipulation in 2015 recommended: "We must develop a code for the foreign exchange market in South Africa. As we were trying to develop, we established that the Bank of International Settlements was working on a code, and South Africa joined that process."
He said the Reserve Bank has provided assistance to the Competition Commission in pursuing this case and would continue to do so.
